Monday, March 30, 2009

Najib It Is

Malaysia's leading ethnic party names a scandal-ridden party hack as its head and the country's leader

Written by Our CorrespondentSunday, 29 March 2009

On Friday, Malaysia is scheduled to end months of waiting to announce its new prime minister, Najib Tun Razak, after the United Malays National Organization, the country's biggest ethnic party named him their leader during their annual convention.

Najib told the UMNO parley, held in Kuala Lumpur last week, that it is crucial that his party reform itself or it will lose its hold on the electorate. But Najib's history, and that of the party itself, portends instead a return to the politics and practices that got the national ruling coalition into trouble in the first place, losing its historic two-thirds majority in the national parliament in national elections last year. Najib's ascent to power more likely represents a clear preference by UMNO stalwarts to return to cronyism, money politics and corruption after an eight-year interregnum from the authoritarian reign of Prime Minister Mahathir Mohamad.

The new prime minister's history may make it problematical whether the leaders of major countries are going to want to be seen with him. Concerns include hundreds of millions of dollars in questionable contracts steered to UMNO cronies and friends, not to mention continuing allegations of his involvement in the murder of the Mongolian translator Altantuya Shaariibuu following the controversial purchase of French submarines and, more recently, his role in sabotaging the opposition in the state of Perak and his shuttering newspapers and thwarting opposition candidates during his own party's elections last week.

The convention itself was a good example. Opponents of the Najib team were denied places on the ballot by a panel supposedly charged with cleaning up money politics, although they let Najib's allies slide by after having committed the same offenses. The result was that the deputy president, Muhyiddin Yassin, and all three vice presidents are from the Najib faction although the Najib forces were unable to prevent Khairy Jamaluddin, the son-in-law of ousted Prime Minister Abdullah Ahmand Badawi, from becoming head of the important UMNO Youth wing. They also were unable to stop Shahrizat Abdul Jalil from defeating longtime party hack Rafidah Aziz to take over the Wanita, the women's wing of the party, also a Badawi ally.

The final election night erupted into name-calling, with allies of Mukhriz Mahathir, the son of the former prime minister, charging that Khairy had bought the votes to make him head of UMNO Youth. Mahathir Mohamad himself railed against the two candidates against his son, calling them corrupt. Rais Yatim, the foreign minister, who lost out in one of the vice president races, demanded that UMNO's disciplinary board investigate the entire new supreme council over allegations that they had delivered gifts and money to delegates in the effort to win their seats. Mahathir Mohamad has repeatedly launched furious attacks on UMNO leaders, calling them corrupt although he showed up at the last night of the convention to be seen with Najib and others.

The UMNO-owned New Straits Times described the top party positions as having "given much-needed breathing space to Najib as he sets out to unite UMNO and push the party to undertake the reforms he has promised. He will have less of a task to deal with the factionalism that so often arises after a bitterly fought contest in the party." But in fact, UMNO appears to be as much riven by factional politics as it was going into the convention.

As early as April 8, the party faces the first of three important by-elections – one for a seat in the Dewan Rakyat, or national assembly, and two more for state legislative seats. The first test is for a Perak seat in which support for the Barisan appears to be waning.

"The problem is not the opposition, but within our own ranks," a local leader told the Kuala Lumpur-based website Malaysia Insider, referring to the perennial problem of factionalism within Umno.

Najib has sought to nullify the opposition with force. Last Monday, a rally led by Opposition Leader Anwar Ibrahim was broken up by police who fired tear gas at the audience. Other rallies have been cancelled as well. Two opposition newspapers were cancelled until after April 8, the date of the Perak national by-election, presumably because the two papers have hammered away at allegations of Najib's connections with the two men on trial for killing Altantuya in October of 2006 and her role in the €1 billion purchase of French submarines that netted one of his closest friends €114 million in "commissions."

To say Najib brings considerable baggage with him is an understatement. While attention has focused on allegations of corruption in the submarine purchases, the fact is that as defense minister from 1999 to 2008, Najib presided over a cornucopia of defense deals that poured a river of money into the coffers of his close friends and UMNO cronies. A September 24, 2007 story in Asia Sentinel quoted Foreign Policy in Focus, a think tank supported by the Institute for Policy Studies in Washington, as saying that "many foreign arms manufacturers generally used well-connected Malaysians as their lobbyists for contracts."

Three contracts approved under Najib have been widely cited by the opposition and fit well into Foreign in Policy in Focus's patronage scale. They have been forced back into public attention by his ascension to the premiership and by the exoneration under questionable circumstances of Abdul Razak Baginda, one of his closest friends, for Altantuya's murder.

Spending for defense accelerated across the board after Najib, called "the driving force" behind Malaysia's military modernization program by Foreign Policy in Focus. The shopping list, the think tank reported, "includes battle tanks from Poland, Russian and British surface-to-air missiles and mobile military bridges, Austrian Steyr assault rifles and Pakistani anti-tank missiles. Kuala Lumpur was also negotiating to buy several F/A 18s, the three French submarines and Russian Suhkoi Su-30 fighter aircraft.

It was the Sukhois that, after the French submarines, became the second controversial purchase brokered by Najib. The deal, worth US$900 million (RM3.2 billion), was through a Russian state company, Federal State Unitary Enterprise 'Rosoboronexport' on May 19, 2003. A company called IMT Defence Sdn. Bhd. was appointed the local agent for the Russian company and received 12 percent of the purchase price, US$108 million (RM380 million). The principal figure and chairman of IMT Defence is Mohamad Adib Adam, the former chief minister of Malacca, the previous Land and Development Minister and a longtime UMNO stalwart.

The involvement of IMT Defence only became known because in March 2005, a former director of IMT, Mohamad Zainuri Mohamad Idrus, filed suit against several Adib-related companies, alleging that Adib and his sister, Askiah Adam, "wanted to prevent him from exposing the reality of the Sukhoi deal." In 2006, Mohamad Zainuri lodged a police report alleging that Adib had stolen the US$108 million (RM 380 million) commission that was supposed to be channeled to the company.

According to Mohamad Zainuri's report, Adib had secretly registered a new company in the federal island of Labuan, Malaysia's offshore banking center, bearing a name similar to IMT Defence Sdn Bhd, allegedly in order to channel the commission illegally to the new company. The report was then sent to the Commercial Crime Investigations Department Headquarters. No report, however, has ever been released to the public.

Then, in late 2007, a third military scandal surfaced. Malaysia's Auditor General, in a report tabled in Parliament on September 7, alleged that a contract to build naval vessels given to PSC-Naval Dockyard, a subsidiary of Penang Shipbuilding & Construction Sdn Bhd, which is owned by another UMNO crony, Amin Shah Omar Shah, was near failure.

PSC-Naval Dockyard was contracted to deliver six patrol boats for the Malaysian Navy in 2004 and complete the delivery by last April. Those were supposed to be the first of 27 offshore vessels ultimately to cost RM24 billion plus the right to maintain and repair all of the country's naval craft. But only two of the barely operational patrol boats had been delivered by mid 2006. There were 298 recorded complaints about the two boats, which were also found to have 100 and 383 uncompleted items aboard them respectively.

The original RM5.35 billion contract ballooned to RM6.75 billion by January 2007. The auditor also reported that the ministry had paid out Rm4.26 billion to PSC up to December 2006 although only Rm2.87 billion of work had been done, an overpayment of Rm1.39 billion, or 48 percent. In addition, Malaysia's cabinet waived late penalties of Rm214 million. Between December 1999, according to the Auditor General, 14 "progress payments" amounting to Rm943 million despite the fact that the auditor general could find no payment vouchers or relevant documents dealing with the payments.

The auditor general attributed the failure to serious financial mismanagement and technical incompetence stemming from the fact that PSC had never built anything but trawlers or police boats before being given the contract. Once called "Malaysia's Onassis" by former finance minister Daim Zainuddin, Amin Shah was in trouble almost from the start, according to a report in Singapore's Business Times in 2005. The financial crisis of 1997-1998 meant he was desperate to find funds to shore up ancillary businesses, Business times reported.

After a flock of lawsuits, the government ultimately cut off funding in 2004 amid losses and a net liabilities position. Boustead Holdings effectively took control from Amin Shah, reducing him to non-executive chairman.

The scandal is bringing shame to the nation and damaging our international credibility. For the honour of the nation, for the honour of the office of prime minister, for the honour of the sovereign institutions expected to endorse, confirm and lend authority to him should he become prime minister according to Umno's plans, Dato' Seri Najib Tun Razak should finally face these suspicions and implied charges, submit himself to legal scrutiny, and come clean on them."

"Swearing on the Al-Quran is not the way out," Razaleigh continued. "Scoundrels have been known to do that. The truth, established through the rigorous and public scrutiny of the law, is the only remedy if an untrue story has gained currency not just internationally but at home among a large section of the people. Najib should voluntarily offer to testify at the trial of the two officers charged with killing Altantuya Shaariibuu. He could also write to these newspapers and if necessary he should take legal action against them to clear his name and that of our country."The case has troubling aspects that have increasingly been noted in British and French newspapers after Asia Sentinel raised them in 2007. They bear repeating.

According to testimony in the trial of the two men accused of killing her, Altantuya accompanied her then-lover Abdul Razak Baginda to Paris at a time when Malaysia's defense ministry was negotiating through a Kuala Lumpur-based company, Perimekar Sdn Bhd, to buy two Scorpene submarines and a used Agosta submarine produced by the French government under a French-Spanish joint venture, Armaris, which in turn was bought by DCNS, a French contractor, in 2007. Perimekar at the time was owned by a company called Ombak Laut, which was wholly owned by Abdul Razak.

The contract was not competitive. The Malaysian ministry of defense paid €1 billion (RM 4.5 billion) to Amaris for the three submarines, for which Perimekar received a commission of €114 million (RM510 million). Deputy Defense Minister Zainal Abdidin Zin told the Dewan Rakyat, Malaysia's parliament, that the money was paid for "coordination and support services" although the fee amounted to a whopping 11 percent of the sales price for the submarines. Altantuya, by her own admission in the last letter she wrote before her murder, said she had been blackmailing Abdul Razak Baginda, pressuring him for US$500,000. She did not say how she was blackmailing him, leaving open lots of questions.

The French government has never shown any enthusiasm for investigating French companies alleged to be involved in corruption in gaining contracts overseas. It appears likely that it will in this case.

After Altantuya was murdered, one of her accused assassins, Sirul Umar, in a written confession, said he and his boss had been offered RM50,000 to RM100,000 to kill her. In the 22 months since the trial began, nobody in court has thought to ask who was going to pay the money. Abdul Razak Baginda was exonerated by the court and has left the country to study at Oxford.